Collin Brantmeyer, The Motley Fool
5 min read
In This Article:
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Visa's stock recently dropped on news that major retailers may shift to stablecoins.
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The payments giant has paid and raised its dividend for 15 consecutive years.
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Visa has other challenges, too, as it continues to face anti-trust lawsuits.
Shares of Visa (NYSE: V) dropped by 7% on June 14 after The Wall Street Journal reported that retail giants Walmart and Amazon are exploring the launch of their own stablecoins. The development raises serious questions about the future of traditional payment networks, especially as retailers become increasingly frustrated with the fees associated with them.
Let's examine Visa's stance on stablecoins, its recent earnings, and valuation to determine whether its stock is a buy, sell, or hold.
Stablecoins are digital tokens designed to maintain a steady value by being pegged to traditional currencies, such as the U.S. dollar. Backed by reserves of cash or cash-equivalent assets such as Treasury securities, they are primarily used to hold value or facilitate transactions within the broader cryptocurrency ecosystem.
For retailers like Amazon and Walmart, the idea is that stablecoins could reduce settlement delays, eliminate interchange fees, and ultimately become less dependent on payment processors such as Visa and its closest competitor, Mastercard.
Visa's management isn't blind to the shifting landscape. The company offers a seven-day-a-week stablecoin settlement, having recently surpassed $200 million in cumulative stablecoin volume. Visa CEO Ryan McInerney described the nascent, but fast-growing opportunity:
It's still early, but we do see real potential, which is why we've been investing in the crypto space broadly in the stablecoin space specifically for many years now. We've built up a team of real experts that I think are very well respected among the ecosystem, but it's early. On the one hand, $200 million is a great kind of milestone. On the other hand, it's still a relatively, a very small portion of our overall settlement volume.
Additionally, Visa is actively exploring programmable finance through initiatives like its Tokenized Asset Platform, which aims to help banks securely issue and manage stablecoins. One of its early partners, BBVA Argentina, plans to roll out the pilot stablecoin project with Visa sometime in 2025.
While it remains unclear whether stablecoins will achieve widespread adoption, Visa is taking steps to ensure it maintains a central role if they do. Meanwhile, lawmakers in Congress are working on a regulatory framework that would set clear rules for stablecoins, including pathways for private companies to issue them under federal oversight.
